Mercedes-Benz to sell Smart factory in France

Mercedes-Benz has announced plans to close its factory in Hambach, France, where vehicles for the Smart brand are currently produced, as part of measures to cut costs and streamline its production network – and in a move that represents a major shift in its electric production strategy.

The plant in the Moselle province of France, originally known as ‘Smartville’, opened in 1997 to build cars for the Mercedes city car brand. It currently produces the electric Smart EQ Fortwo and EQ Fortwo Cabriolet. Around 1600 staff currently work at the site.

In 2018, Mercedes announced a €500 million (£445m) investment into the facility to upgrade it for electric car production, with plans to build a compact Mercedes EQ model alongside the Smart line. But last year, Mercedes-Benz sold 50% of the Smart brand to Chinese firm Geely, with production of its future models switching to China as part of the agreement – and creating questions over the future of the Hambach site.

The German firm said the need to invest in electrification and digitalisation of vehicles and cut CO2 emissions from production, along with the economic impact of Covid-19, meant that it needed to take measures to “sustainably improve its cost structure and become significantly more efficient”.

Board member Markus Schäfer said: “An important goal for us is to secure the future of the location. Another condition: the current Smart models will continue to be produced in Hambach.” It is not clear if Mercedes intends to operate the plant until the production run of the current Smart models ends, or if that will be part of the contract for any new buyer.

Mercedes has previously announced plans to build electric cars at its German plants in Bremen, Rastatt and Sindelfingen, and the production of the unnamed compact EQ model due to be built at Hambach will likely shift to one of those sites.